Outlook: Energies are pushing higher today with the front month crude contract trading back above $100. A softer dollar today is helping dollar-priced commodities see a boost as they become more attractive for holders of alternate currencies. Investors will continue to speculate ahead of the Fed meeting next week where the fed will decide on the next interest rate hike. The expectation is that the Fed will increase interest rates by 75 bps for August. President Biden returned from his trip to the Middle East without a formal commitment from producers to increase production. There is optimism that another increase in production may be discussed at the next OPEC+ meeting in early August. Recession fears and demand destruction will act to keep a lid on upward market moves while tightening global supply will act as support for downside moves.
Crude
- President Biden ended his Middle East trip without additional commitment to more production.
- US energy envoy Amos Hochstein said he is confident Gulf producers will increase oil output following Biden’s trip to Saudi Arabia.
- OPEC+ will meet on August 3rd to discuss their September production target.
- Libya’s exports are on track for full resumption after months of outages.
- Mass covid testing continues throughout parts of China this week.
- The IEA forecasted global oil production increased by 690,000 bpd in May to 99.5 million bpd.
- US crude oil rigs increased by 2 last week, bringing the total rig count to 599.
- Global floating crude storage declined by 6.3% week-over-week.
- The Fed will meet next week to discuss its next interest rate hike. Another 75 bps is the consensus despite whispers of moving up to 100 bps.
- As of 8:15 am CST: Brent crude oil up $4.23 to $105.39, US dollar index down $1.017 to 107.039 while the nearby e-mini S&P 500 futures contract is up 24.25 to 3889.00.
Diesel
- Chinese shipments of gas and diesel have plunged over the first six months of the year after the allocation of smaller export quotas.
- Chinese diesel exports were down 84% for the first six months of the year to 2.06 million tons.
Gasoline
- Chinese gasoline exports were down 42% in the first half of the year to 5.6 million tons.
- This week’s commitment of traders report put the net spec and fund long in gasoline just above the lowest net spec and fund long since 2017.
Propane
- Conway is trading at $1.1300 and Belvieu is trading at $1.14.
- There has been no update on the Medford, OK facility that has been shut down for over a week following an explosion.
- Conway is trading at 48% of crude.
- The US is exporting 64% of production as of 7/13.
Natural Gas
- Total US gas demand decreased by 3.9 Bcf/d to 96.5 Bcf/d yesterday.
- The US natural gas rig count remained flat last week at 153 rigs.
- Last night’s weather runs added 5 CDDS to the two-week forecast.
Oil Demand: OPEC’s oil demand outlook is more aggressive than both the EIA and IEA. OPEC sees oil demand growth of 2.7 million bpd in 2023 while both the EIA and IEA are estimating around 2 million bpd of growth. OPEC will need to produce near 30 million bpd in 2023 to meet rising demand, while their production currently sits at 28.6 million bpd as of June.
